Les Potton Chartered FCIPD ACII Director and managing consultant, Target HR and Training Ltd

1. Les Potton Chartered FCIPD ACII
Target HR and Training Ltd
Email: les@target-hr.co.uk; www.target-hr.co.uk Tel: 07533 161310
Employment Status and Contracts

2. Objectives of the Session
► To know what employment and worker statuses exist
► To gain a basic understanding of the differences in the
legal treatment and operation of each status
Slide 2

3. Employment and Worker Status
► Permanent Employee (full time and part time)
► Fixed Term Employee (full and part time)
► Zero Hours Contract Employee
► Casual Worker
► Agency Worker
► Self‐employed Contractor
► Limited Company Contractor
► Umbrella Company Contractor
Slide 3

4. Employment Contracts
True or False ?
► You have to provide a copy to
the employee ?
► “Employment Contracts” are NOT contracts
► The “contract” does not have to be in writing to be
enforceable
► The “contract” has to be signed by the employee to be
enforceable
Slide 4

5. Employment Contracts
► Must be provided within 2 months of starting work
► Content governed by Employment Rights Act
► Reality overrides what is written
► Changes can happen via “custom and practice”
► Cannot be varied without agreement
► If critical to vary, you must consult and then dismiss for SOSR and
offer re‐engagement on the new terms
► To do this you must be able to show a tribunal that the business case justified
the drastic action
Slide 5

6. Fixed Term Contracts
True or false ?
The contract naturally expires, in law, on the specified end
date
Fixed term workers have to be pooled with permanent
staff for selection during a redundancy exercise
Slide 6

7. Fixed Term Contracts
► Operates for a finite period and has a specified end date
► The contract will not automatically expire unless it is set up for a
specific task or purpose (eg maternity cover)
► Non‐renewal of the contract is a dismissal
► The dismissal must be for one of the “fair” reasons in the
Employment Rights Act
► The employee has unfair dismissal rights and the right to a
redundancy payment if subsequent contracts exceed 2 years
► A fixed term worker must be treated in the same way as a
permanent employee unless there is an objective reason not to do
so (Fixed Term Worker Regulations 2002)
Slide 7

8. ”Zero Hours Contracts”
True or False ?
Staff on Zero Hours Contracts cannot work for another
organisation
“Zero Hours Contracts” have no legal definition
Slide 8

9. ”Zero Hours Contracts”
► No legal definition
► Can be permanent or fixed term contract
► No minimum hours of work
► There is normally a contract and an expectation that shifts will be
offered and the employee is obliged to accept the shifts that are
offered subject the contract and Working Time Regulations
► If there is mutuality of obligation to offer and accept work, then
full employment rights are held
► From 2016, the contract cannot have an exclusivity clause
prohibiting the employee from working for other employers
Slide 9

10. Casual Workers
True or False ?
► Casual Workers are useful as when they are not
performing well you can just stop using them,
regardless of how long they have been with you
► Casual Workers always have a different legal status to
those on “Zero Hours Contracts”
► Casual Workers don’t get holiday as they don’t have to
work anyway
Slide 10

11. Casual Workers
► No employment contract
► Limited “Worker” rights
► Often called “Zero Hours Contract”, but can be misleading
► Sometimes a “Casual Worker Agreement” exists setting out the
terms when the individual is engaged
► There is no “mutuality of obligation”. You do not need to offer
them work and if you do they can turn it down.
► If the work is truly casual, then there is no need to dismiss the
worker, you simply stop using them.
► If regular patterns of work are offered and accepted, then an
employment contract can become implied.
► Casual work is really work that is sporadic, not guaranteed and
where the individual is not critical to the operation
Slide 11

12. Agency Workers (Temps)
True or False ?
► Agency workers are still employees and must be
treated the same as permanent staff
► Under the recent Agency Worker Regulations you are
responsible for ensuring agency workers are always
paid at least as much as your permanent staff
Slide 12

13. Agency Workers (Temps)
► No employment contract with the end client
► Usually employed by the agency and then
“leased” to the client for a fee
► No employment rights with the client, and therefore the client can
decide to end the relationship in line with the commercial
contract, without having to go through disciplinary etc.
► If the Agency Worker is with the same client for 12 weeks, under
the Agency Worker Regulations they are entitled to the same
basic working rights (pay and conditions) as the clients employees
doing similar work.
► The agency must comply with the regulations, but the client must
co‐operate and supply information on their workers.
Slide 13

14. Self Employed Contractor
► No employment contract but a “Contract for Services” may exist
which is a business / commercial contract
► The contractor :‐
► runs their own business as a sole trader
► does their own accounts and tax return
► invoices the customer
► is free to work for other clients
► manages their own time
► may substitute other persons to carry out the service
Slide 14

15. Limited Company or “Umbrella”
► Similar commercial arrangement to self‐employed contractor – eg
“Contract for Services”
► The individual is an employee (usually Director) of their own
limited company or they work for an “Umbrella” company
► The limited or Umbrella company transacts with the customer and
completes and accounts for PAYE tax for the individual
► The usual tests for employment status apply , eg client control,
working for other clients, substitution of resource, invoicing etc
Slide 15

16. Any Questions
Slide 16